Posted by Paul Kallenbach and Nick Liau
Background
A large number of Australian internet users have been downloading copyright content – movies and TV shows – using a peer-to-peer protocol known as BitTorrent. It is beyond doubt that this constitutes copyright infringement. However, practical considerations have dissuaded copyright owners from pursuing copyright infringement actions against individual internet users (a ‘teaspoon solution to an ocean problem’, in the words of Randall Picker).
In 2008, the copyright owners and licensees of this content turned their attention to another target. The Australian Federation Against Copyright Theft (AFACT), representing these owners and licensees, began sending notices to iiNet alleging that certain users had infringed copyright by downloading films, and requesting that iiNet prevent those customers from continuing to infringe.
Later that year, the copyright owners and licensees launched proceedings in the Federal Court against iiNet, then Australia’s third largest internet service provider (ISP). The 34 applicants claimed that iiNet had authorised certain of its customers to download infringing content, and iiNet should as a consequence be held liable pursuant to the authorisation infringement provisions under section 101(1A) of the Copyright Act 1968 (Cth).
At first instance, Justice Cowdroy held in favour of iiNet. A summary of His Honour’s judgment can be found in our Alert - Two significant Australian copyright decisions handed down.
The film studios and television networks appealed to the Full Federal Court. Their appeal was dismissed. A summary of the Full Court’s judgment was discussed in our Alert – Will the show go on? Victory for iiNet in the Federal Court.
A further appeal was lodged with the High Court. On Friday 19 April 2012, in two separate judgments, the High Court unanimously dismissed that appeal, holding in favour of iiNet.
Reasons
Each of the judgments focussed on the factors set out in section 101(1A). These are a set of non-exhaustive factors to be considered when determining whether authorisation liability has arisen.
The factors are, in summary:
- whether the person (in this case, iiNet) had the power to prevent the doing of the act concerned
- the nature of the relationship between the person and the person who did the act concerned, and
- whether the person took any other reasonable steps to prevent the infringements.
Power to prevent
More specifically, iiNet had no technical power at its disposal to prevent its customers from using the BitTorrent system to download the studios' films. iiNet did not control the BitTorrent system. It could not control the choice of its customers to use the BitTorrent system, nor could it modify the BitTorrent software or remove the studios' films once made available online.
Rather, the extent of iiNet’s power was limited to an indirect power to prevent primary infringement by terminating the internet access of its subscribers.
Justices Gummow and Hayne expressly distinguished this case from the circumstances in University of New South Wales v Moorhouse [1975] HCA 26, one of the leading cases on authorisation liability. In that case, the University of New South Wales provided unsupervised access to photocopiers adjacent to its library. These were used to photocopy a library book, thereby constituting an infringement of the owner’s copyright in that book. It was held that the University had authorised the infringement of the owner’s copyright.
Their Honours observed that, in Moorhouse, the University controlled access to the photocopying machines in a room close to the library, to the books on its shelves (including the one that was copied), and also to the premises containing the library and the machines. This level of control was absent in the present case. That is, iiNet did not control the BitTorrent system, and it did not control the films and other content being distributed over that system. It was only responsible for the provision of internet services.
Relationship between iiNet and its customers
The only ‘indisputably practical’ course of action on the part of iiNet, according to Justices Gummow and Hayne, would be for iiNet to exercise its contractual rights to terminate further activity on suspect accounts.
However, this was not something the Court considered iiNet should have to do. Whilst this would avoid further infringement, it would also deny to those customers use of iiNet’s facilities for non-infringing activities. Further, their Honours also observed that the remedy sought by the studios – disconnection from the internet – is a remedy that would not be available to the studios were they themselves to sue iiNet's customers for copyright infringement.
Other reasonable steps
Chief Justice French and Justices Crennan and Kiefel observed that the nature of the internet, the BitTorrent system, and the lack of an industry code of practice adhered to by all ISPs, are all relevant in concluding that iiNet took reasonable steps to prevent the primary infringement even though it elected not to terminate its contractual relationship with its customers.
Their Honours held that termination of customer contracts was likely to be ineffective, as a disconnected customer could simply sign up with another ISP and continue infringing. This demonstrated iiNet’s limited power in commanding a response from its customers or preventing infringement.
Their Honours also observed that iiNet’s reliance on the AFACT notices would be fraught. At its own expense, iiNet would need to understand and apply the methodology in those notices, which the Court observed fell below the standard of evidence that would be expected in civil proceedings for copyright infringement. Moreover, if iiNet got it wrong and incorrectly terminated a user’s account, it would risk being exposed to liability for wrongful termination.
iiNet’s inactivity was not, according to the Court, a sign of indifference to the appellant’s rights; rather, it was based on an assessment of the risks of taking steps based only on the AFACT notices.
Their Honours held it was reasonable for iiNet to take the view that it need not act on the incomplete allegations of primary infringement in the AFACT notices, and that it need not undertake further investigation. Nor was it reasonable to expect iiNet to continually monitor the IP addresses of its many thousands of account holders for infringing activity and then take steps to address such infringement. To require this of iiNet would be to assume 'obligations on the part of an ISP which the Copyright Act does not impose'.
A new law of authorisation in Australia?
The High Court has now placed the factors set out in section 101(1A) at the centre of any inquiry of authorisation infringement. This marks a departure from previous cases, where those factors have been held to be non-exhaustive factors to be interpreted in light of a long (and somewhat inconsistent) line of cases dealing with authorisation infringement.
In particular, the High Court has cast doubt on the use of Tomlin J’s formulation in Evans v E Hulton & Co [1924] All ER Rep 224, in which His Honour applied the Oxford Dictionary meaning of ‘authorise’ as being synonymous with ‘countenance’. The Court observed that ‘countenance’ has a number of meanings which encompass 'expressing support' (including moral support or encouragement). These meanings are ‘remote’ from the meaning intended under the Copyright Act:
Whilst resort to such meanings may have been necessary in the past, attention is now directed in the first place to section 101(1A).Where to from here?
Unsurprisingly, AFACT issued a press release shortly after the decision calling for legislative reform to address peer-to-peer copyright infringement.
It is likely that the issue will be considered in the upcoming Australian Law Reform Commission (ALRC) copyright inquiry, which has as its particular focus the effects of technology on copyright law. The draft terms of reference were recently released, and are currently open for public comment. It will, however, take many months for this inquiry to be concluded.
In some countries, 'three strikes' laws (sometimes known as 'graduated response' laws) have been introduced, which in certain circumstances require an ISP to take action against copyright infringers.
For instance, in New Zealand, copyright owners are able to lodge notices with a user's ISP alleging that that user has infringed copyright. The ISP then sends a notice to the user informing them of the alleged copyright infringement. After three notices have been sent, the user may be taken before a tribunal and potentially fined for infringement.
Some ISPs in the US have also signed up to a graduated response system, although this is a voluntary opt-in system, rather than a statutorily mandated one. Thus far, three of the largest ISPs in the US have signed up to the program.
In France, a mandatory graduated response policy exists, and is administered through a government agency. Controversially in France, internet disconnection is one possible sanction for repeated copyright infringement.
Whether any of these models is adopted in Australia remains to be seen. No doubt AFACT will continue to press for an industry code of practice to be settled, and it has been reported that copyright owners and ISPs have been in discussions about an industry framework to address peer-to-peer copyright infringement. However, a constant sticking point in these discussions has been exactly how much responsibility an ISP must take for investigating and acting upon potential copyright infringements by customers.
With this decision, the High Court has eased the pressure on Australian ISPs to reach agreement on such a code, or even to continue to participate in discussions. Which makes legislative intervention – of currently indeterminate nature – the likely outcome.
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